Exhibit 10.6
EXECUTION COPY
MANAGEMENT
AGREEMENT
This Management Agreement (this
“Agreement”) is made and entered into as of December
30, 2003, by and between Pilot Group TV LLC, a Delaware limited
liability company (the “Company”), and Barrington
Broadcasting Company, LLC, a Delaware limited liability company
(the “Manager”).
BACKGROUND
WHEREAS, Pilot TV Acquisition
Corporation (“PTVAC”), a wholly-owned subsidiary of the
Company, is preparing to enter into an asset purchase agreement
with Chelsey Broadcasting Company of Quincy, Chelsey
Broadcasting Company of Peoria, LLC and Chelsey Broadcasting
Company, LLC (the “WHOI-TV/KHQA-TV Asset Purchase
Agreement”) to acquire the WHOI-TV and KHQA-TV television
stations (the “WHOI-TV/KHQA-TV Stations”);
WHEREAS, PTVAC also is preparing to
enter into an asset purchase agreement with LIN Television
Corporation, WEYI Television, Inc. and WEYI Broadcasting, LLC
(together with the WHOI-TV/KHQA-TV Asset Purchase Agreement, the
“Asset Purchase Agreements”) to acquire the WEYI-TV
television station (together with the WHOI-TV/KHQA-TV Stations, the
“Initial Television Stations”);
WHEREAS, the Company desires to
engage the Manager to manage the Initial Television Stations and
any Additional Television Stations (as defined herein) on the terms
and conditions set forth in this Agreement; and
WHEREAS, on the date hereof, the
Manager has become a member of the Company in accordance with the
Amended and Restated Limited Liability Company Operating Agreement
of the Company, dated as of the date hereof.
NOW, THEREFORE, in consideration of
the foregoing, and of the covenants and agreements hereinafter set
forth, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Retention of the
Manager . Subject to the provisions of Sections 2 and 3 hereof,
the Company hereby appoints and retains the Manager as the
exclusive manager of the Initial Television Stations and such other
television stations that the Company may acquire from time to time
(the “Additional Television Stations”, and together
with the Initial Television Stations, the “Stations”),
and the Manager hereby accepts such appointment and retention and
agrees to serve the Company in such capacity, pursuant to the terms
and conditions hereinafter set forth. For purposes of this
Agreement, unless the context otherwise requires, the term
“Company” also shall include any existing or future
subsidiaries of the Company.
2. Authority and
Duties of the Manager .
(a) Subject to the
overall direction and ultimate control and general supervision of
the Managing Member of the Company (the “Managing
Member”), the Manager agrees to provide and the Company
agrees to accept the services described in Section 1 of this
Agreement.
(b) Without limiting the
generality of the foregoing, pursuant and subject to Section 2(a)
hereof and the other the terms and conditions set forth herein, the
Manager shall:
(i)
oversee and supervise the operations
of the Stations in accordance with policies established by the
Managing Member and usual and customary standards of efficient
operation and maintenance;
(ii)
generally establish and oversee the
human resource functions of the Stations and shall:
(A)
select, discharge and review
performance and training of all personnel necessary to conduct the
business of the Stations;
(B)
establish personnel and other
management policies and procedures as shall be necessary in
connection with the management and operation of the
Stations;
(C)
supervise the training of management
personnel (and replacements therefor) of the Stations;
and
(D)
develop and implement compensation
policies with respect to personnel employed by the Company at the
Stations and maintain individual personnel files for such
employees;
(iii)
maintain and operate the Stations
including normal repairs, replacements, modifications, capital and
other improvements and maintenance thereof;
(iv)
maintain the operation of the
Stations in compliance, in all material respects, with all
applicable rules, regulations and orders of any federal, state,
county or municipal authority having jurisdiction over the Company
and/or the Stations;
(v)
supervise the establishment of
maintenance standards for the plant and equipment located at the
Stations;
(vi)
supervise the negotiation,
consummation and performance by the Stations of operating
agreements, contracts for the purchase, lease, servicing,
construction, license or use of properties, services and rights as
may be necessary or desirable in connection with the operation
or
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maintenance of the Stations and such
other agreements with respect to the Stations as the Manager may
deem necessary or advisable;
(vii)
assist with the acquisition and
maintenance by the Company of such insurance coverage with respect
to the Stations as the Company may determine upon advice and
consultation of the Manager;
(viii)
supervise the development and
implementation of business management and other corporate
strategies, and all marketing strategies, sales promotions and
advertising for the Stations;
(ix)
assist in the timely preparation and
distribution of annual operating budgets, annual capital budgets,
business plans, cash flow and profit and loss projections,
personnel requirements and key performance milestones for the
Company and the implementation of appropriate accounting,
financial, administrative and managerial controls for the
Company;
(x)
assist with the preparation of the
Company’s monthly and quarterly status reports, financial
reports and cash disbursements reports, as reasonably necessary in
the operation of the Company, and maintain files and records for
the Company;
(xi)
supervise the collection of income
and other amounts due to the Stations and the payment on behalf of
the Stations of expenses relating to the operations and activities
of the Stations in conformity with the annual budgets and business
plans of the Company;
(xii)
provide to the Company all
information necessary for the Company (or its outside accountants)
to prepare its federal, state and local income tax and property tax
returns;
(xiii)
assist the Company (and its
independent public accountants) in the preparation of its annual
audited financial statements;
(xiv)
assist in the preparation of all
documents, certificates, reports and other information required to
be delivered to the Company’s lenders and otherwise assist
the Company and its subsidiaries to comply with the terms of any
document with any such lender;
(xv)
generally establish and oversee
management information systems of the Company relating to the
Stations; and
(xvi)
perform the primary due diligence
work on proposed station acquisitions and assist the Company in
negotiating and executing documentation for such acquisitions as
directed by the Managing Member.
(c) The Manager covenants
with the Company to manage and operate the Stations and to perform
its duties and obligations under this Agreement in accordance with
all applicable laws.
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(d) The Manager shall
conduct itself with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent manager would use
in the conduct of an enterprise of like character and with like
aims as the Company.
(e) It is agreed and
understood by the parties hereto that the duties and
responsibilities of the Manager hereunder and under each Approved
Management Agreement (as defined in Section 5) shall be performed
on a full-time basis by K. James Yager (“Yager”),
Christopher Cornelius (“Cornelius”), Mary Flodin and
Keith Bland (collectively, the “Manager Principals”),
or such other principals of the Manager as may be agreed to from
time to time by Yager and the Managing Member.
(f) Nothing contained in
this Agreement, including without limitation this Section 2, shall
be construed (i) in a manner contrary to the Communications Act, as
amended, or the applicable rules, regulations and policies of the
Federal Communications Commission, or (ii) to limit the full
authority, control and power of the licensee of each Station,
whether PTVAC or any affiliate of the Company, with respect to the
business, management and operation of any Station, including with
respect to the operation, programming, finance or personnel matters
relating to each such Station.
3. Term of
Agreement . The term of this Agreement shall commence on the
Closing Date (as defined herein) and continue until the third
anniversary of the Closing Date unless and until terminated as
follows:
(a) Upon the consummation
of any transaction or the occurrence of any event in either case
which constitutes a Liquidity Event;
(b) By the Company
immediately upon written notice to the Manager for Cause;
provided that if the sole event constituting Cause is the
failure of either Yager or Cornelius to be employed by the Manager,
the Manager shall have 30 days following the occurrence of such
event in order to cure same;
(c) By the Company,
immediately upon written notice to the Manager, upon or following
the consummation of a Qualified Public Offering;
(d) By the Company,
immediately upon written notice to the Manager, upon or following
the dissolution of the Company;
(e) By the Manager, in
the event that the Company materially breaches this Agreement and
fails to cure such breach within 30 days following receipt by the
Company of written notice of the breach (or if such breach is not
susceptible of cure within such period and results from events
beyond the Company’s reasonable control, fails to cure such
breach as promptly as possible); or
(f) By the Company, in
the event that the Manager materially breaches this Agreement and
fails to cure such breach within 30 days following receipt by the
Manager of written notice of the breach (or if such breach is not
susceptible of
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cure within such period and results
from events beyond the Manager’s reasonable control, fails to
cure such breach as promptly as possible).
“Liquidity Event” means (i) the sale
of all or substantially all of the Company’s assets, (ii) a
consolidation or merger of the Company with or into another entity
which results in the members of the Company owning less than 50% of
the outstanding common equity securities of the surviving entity of
such consolidation or merger, or (iii) the date on which the Pilot
Group LP ceases to own at least a majority of the membership
interests of the Company, whether as a result of the sale by the
Pilot Group LP of such membership interests or the issuance by the
Company of additional membership interests. “Cause”
shall exist if (i) the Manager has engaged in gross negligence or
willful misconduct in the performance of its duties hereunder, (ii)
either Yager or Cornelius ceases to be employed by the Manager,
(iii) the Manager commits an act of fraud or intentionally
misappropriates funds of the Company, (iv) the bankruptcy of the
Manager, or (v) the indictment of the Manager or any of the Manager
Principals for any criminal act. “Qualified Public
Offering” shall mean an underwritten primary offering to the
public of the common equity securities of the Company or any direct
or indirect subsidiary of the Company that is controlled by the
Company, in each case where the gro
